Healthcare trust surge boosts PMI sales: LaingBuisson

An surge in demand for healthcare trusts has driven an increase in coverage of private medical cover across the UK in 2015, reversing the long-term decline in the sector.

Latest figures from healthcare market intelligence provider LaingBuisson show the number of PMI policies in the UK grew by 2.1 per cent in 2015 to reach 4 million, following flat demand from 2012 to 2014 and shrinking demand from 2008 to 2011.

An 8 per cent growth in the number of subscribers to healthcare trusts was the biggest factor in the increase – with the number of people covered across corporate schemes increasing by 3.4 per cent across the board. Company paid subscriber policies accounted for just over three-quarters 76.3 per cent of total market volume demand, representing 3,070,000 subscribers at the end of 2015.

But the individual PMI sector saw a fall of 1.7 per cent of subscribers, with 952,000 individuals with schemes, covering 10.6 per cent of the population.

Claims paid in 2015 stood at £3.6bn, including £2.9bn paid to insured claimants, and £688m paid to claimants covered by self-insured schemes. Overall claims paid increased by 2.1 per cent over the year, while claims on self-insured policies were up by 7 per cent and insurance claims overall were up 1 per cent.

Total spending on UK private medical cover – across both insured and self-insured healthcare trusts – grew by 2.8 per cent in 2015 to reach £4.7bn. Premium income generated from sales of insured policies grew by 2.1 per cent, leading to a rise in insurance gross margins to 26.7 per cent in comparison to 25.9 per cent in 2014.

But volumes are yet to bounce back to pre-2008 levels when subscriber demand stood at 4,350,000 – representing market penetration of 12.4 per cent of the UK population. And LaingBuisson says the medical cover sector faces further headwinds from recent and forthcoming rises in insurance premium tax (IPT) and uncertainty from the UK’s impending exit from the European Union.

Report author and healthcare economist Philip Blackburn says: “A sharp increase in IPT from 6 per cent to 9.5 per cent effective from November 2015, and further rise to 10 per cent from November 2016 has loaded significant additional cost for all medical insurance customers. A further hike to 12 per cent in June 2017 will tighten this ‘taxation straitjacket’, and in an industry where affordability has been identified as the primary reason for a lack of growth in demand, this hefty additional burden is likely to mean demand for PMI is vulnerable going forward, but this may be balanced by a shift to healthcare trusts.”

“Notwithstanding this, there has been a clear rise in interest in private healthcare recently as more and more people are dissatisfied with higher waiting on the NHS and increased restrictions on NHS treatment. Private medical cover will benefit from this, and there is a wide choice of policy options at different prices to attract customers.”